Dutch regulators fine Fortis for false information ahead of 2008 near-collapse

Dutch fine Fortis for false information

BRUSSELS — Belgian insurer Fortis Holding said Wednesday that Dutch regulators fined it euro576,000 ($781,000) for giving incorrect information about the financial situation of Fortis bank, months before it nearly collapsed and sought government rescue.

Fortis has the name and some of the assets and liabilities of what was once the largest bank in Belgium, the Netherlands and Luxembourg. It ran into funding problems in September 2008 and got a bailout from the three governments after piling on debt from a massive banking takeover.

Belgium sold Fortis’ core Belgian banking operations to France’s BNP Paribas in 2008, leaving Fortis shareholders with the far smaller insurance operations, a host of legal liabilities and shares that had lost most of their value.

The company said it would appeal a Feb. 5 ruling from the Netherlands’ AFM that said Fortis made “incorrect or misleading” statements about its financial situation in June 2008 and should have gone public about its deteriorating finances to avoid shareholder harm.

Fortis also said it was facing shareholder lawsuits and administrative and criminal investigations in Belgium the Netherlands and the United States, “some of which could result in substantial but currently unquantifiable future liabilities.”

It said Belgian and Dutch court-appointed experts are examining Fortis’ 2007 offer to buy part of ABN Amro — part of the biggest banking takeover ever — and how the bank financed the deal and informed shareholders about it.

Shareholders in Belgium and the Netherlands are suing to demand the annulment of decisions Fortis made surrounding the government rescue of the bank in 2008 that saw the value of their shares tumble. They are also seeking compensation for alleged miscommunication or market abuse committed by Fortis from May 2007 and October 2008, it said.

The company also said it was checking if it was liable for legal expenses and compensation for former Fortis executives who left the company and are now being sued individually for their actions at the bank. Some received generous handouts widely criticized in Belgium.

Fortis reported its 2009 results on Wednesday, returning to profit after a disastrous loss in 2008 — and announced that it would change its name to ageas to give the business a fresh start.

Fortis made a profit of euro1.192 billion last year from expanding its life insurance activities in Europe and Asia. It posted a euro28 billion loss in 2008.

It said its new name comes from the Latin verb “agere,” meaning action, drive and a conviction to forge ahead. The previous name, Fortis, was Latin for strong.